Stocks Slip Lower, Retail Sales On Deck, Home Depot Earnings, Buffett Adds Capital One, Horizon Therapeutics Deal In Doubt – 5 Things To Know

Five things you need to know before the market opens on Tuesday, May 16:

1. – Stock futures drop as focus on debt ceiling talks

US stock futures fell on Tuesday, while the dollar gave up gains against its global peers and Treasury yields steadied, as investors remained cautious ahead of key debt ceiling talks later in the day in Washington.

Stocks have been mired in one of the narrowest trading ranges of the past two years this month, with the S&P 500 still just 40 points away from its year-to-date high in early February, but still unable to break out of its tight trade. The range amid concern that the market could turn on failure to end the debt ceiling impasse.

House Speaker Kevin McCarthy added to that concern last night when he described the staff-level talks, which are expected to continue with President Joe Biden later today at the White House, as “nowhere near a conclusion,” even as the secretary reiterated Treasury Janet relents her warning. That the United States may face the risk of default by the end of this month.

Yellen said in a letter to McCarthy’s publication late last night.

Traders are now pricing the one-month treasury bill at 5.85%, about 60 basis points north of the six-month note, to reflect this risk, although the broader treasury complex remains optimistic.

The benchmark two-year note was pegged at 3.991% in overnight trading, while the 10-year note slipped to 3.479% and the US dollar index, which tracks the greenback against a basket of global peers, fell 0.12% to 102.260.

Growth concerns were also in focus after yesterday’s disappointing reading of the New York Fed’s Empire State Manufacturing Index for May, which fell by 40 points to -31.8, the second-lowest reading of the post-Covid cycle. The Federal Bank of Philadelphia publishes an index of regional activity on Thursday.

Stocks appear poised for another range-limited session ahead of April retail sales data at 8:30 a.m. ET, with futures linked to the S&P 500 pointing to a modest 2-point drop in the opening bell and those linked to the Dow Jones Industrial Average. 26 drop points. The technology-focused Nasdaq fell 10 points.

In Europe, the region-wide Stoxx 600 posted a decline of 0.03% in early trading in Frankfurt after data pointing to a modest first-quarter GDP growth rate of 0.1% for the eurozone economy, a figure largely in line with analysts’ expectations.

Overnight in Asia, the MSCI ex-Japan regional index rose 0.19% at the end of trading, despite disappointing data from China that suggested the world’s second-largest economy is finding its post-Covid recovery more difficult than expected.

In Japan, the Topix index, the country’s broadest measure of stock prices, rose 0.58% to 2,127.18 points, the highest level since August 1990, as stocks continued to extend their impressive year-to-date gains. The Nikkei 225 index closed up 0.73% at 29,842.99 points.

2. – Retail sales are on deck after consumers supported first-quarter GDP growth

The Commerce Department will publish its regular reading of April retail sales on Tuesday, with analysts looking for a modest rebound in spending from March levels thanks to higher gasoline sales and a jump in used car prices.

Economists expect a headline gain of around 0.7%, after two straight months of declines, as April auto sales — which came in at 15.9 million, near January’s peak — lead the overall gain. The control group reading, which excludes energy, autos and other seasonally volatile items, is expected to grow by about 0.3%.

Higher levels of spending will prove crucial to the US’s efforts to avoid a slide into recession. The US economy expanded at an annual pace of 1.1% over the three months ending in March, according to the Commerce Department’s first estimate of gross domestic product growth, down from a 2.6% advance during the final three months of last year and notably shy of analysts’ 1.9%. weather forecast.

“The overall spending support from savings built up during Covid — the key buffer against aggressive Fed hikes over the past year — is fading fast,” said Ian Shepherdson of Pantheon macroeconomics. “The monthly pace of savings withdrawals has already slowed, and we can’t rule out a complete cessation of savings even before the inventory hits zero.”

3. – Focus on Home Depot earnings as retail week heats up

Home Depot (HD) – Get a free reportShares fell in pre-market trading ahead of the home retailer’s first-quarter earnings before the opening bell.

Home Depot, which begins three days of March quarter earnings for the nation’s largest retailer, is expected to post net profit of $3.80 per share, down 7.6% from the year-ago period. Revenue is likely to be largely flat compared to last year, at $38.3 billion,

Earlier this year, Home Depot reiterated its forecast for an “average single-digit” decline in 2023 earnings, with similar sales expected to stabilize at 2022 levels.

Home Depot shares were down 0.05% in pre-market trading, indicating an opening bell price of $288.38 per share.

4. – Berkshire Hathaway played by Warren Buffett takes a new position at Capital One

Billionaire investor Warren Buffett’s investment vehicle Berkshire Hathaway has boosted its stake in Apple (AAPL) – Get a free reportand Bank of America (Buck) – Get a free reportDuring the first quarter with the addition of a new position at Capital One Financial (COF) – Get a free report.

In Berkshire’s regular 13-F filings with the US Securities and Exchange Commission, which were published late Monday, the group disclosed that it had added about 20.4 million shares to its holding of Apple, bringing it to about xx%. It also added 22.75 million shares in Bank of America and built 9.92 million shares in Capital One.

Earlier this month, Buffett called Apple “different than other companies we own” but also “a better company” at its annual shareholder meeting in Omaha, Nebraska.

Berkshire itself reported a 13% jump in first-quarter operating profit, Buffett’s favorite metric, which came in at $8.07 billion.

Capital One shares were ticked up 7% in pre-market trading to indicate an opening bell price of $95.30 per share.

5. – Horizon Therapeutics Drowns in Report FTC Will Work to Block Amgen Acquisition

Horizon treat (HZNP) – Get a free reportShares fell in pre-market trading after reports that the US Federal Trade Commission was ready to challenge Amgen’s $27.8 billion acquisition of the developmental drug company. (AMGN) – Get a free report.

Reuters reported late Monday that the Federal Trade Commission will file a lawsuit to block the deal early in the day, following criticism from top US lawmakers, including Sen. Elizabeth Warren, over its impact on drug prices.

Amgen outbid interest from Johnson & Johnson JNJ, as well as France’s Sanofi, when it offered to pay $116.50 per share for Dublin, Ireland-based Horizon. Horizon’s best-selling drug Tepezza, which is used to treat thyroid eye disease, is expected to generate $4 billion in annual sales over the coming years. The other main drug of the group, Krystexxa, is used to treat patients with gout.

Shares of Horizon Therapeutics were flagged down 18% in pre-market trading to indicate an opening bell price of $92.10 per share.